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HomeMy WebLinkAboutRes2011-070 Sponsored by: Oates CITY OF SEWARD, ALASKA RESOLUTION 2011 -070 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING A FINANCIAL ADVISORY AGREEMENT WITH BLITCH ASSOCIATES, INC. WHEREAS, the City of Seward previously maintained a contract with Wells Fargo Brokerage Services, LLC (``WFBS ") to provide financial advisory services, with said contract having terminated effective November 6, 2009; and WHEREAS, the City has maintained a financial advisory relationship with Don Grimes ( "Grimes ") since the early 1980s when the City obtained financing for the Spring Creek Correctional Center, and the contract between the City and Wells Fargo Brokerage Services, LLC was terminated by WFBS upon Mr. Grimes' retirement from that firm; and WHEREAS, Grimes has joined Blitch Associates in Houston, Texas, as Senior Vice President; and WHEREAS, Grimes will continue to offer financial advisory services in Alaska under his new affiliation and has expressed a desire to continue to represent the City of Seward under agreement similar to the one previously in place with WFBS; and WHEREAS, the City's agreement with Blitch Associates provides that the City may terminate the agreement upon 30 days' notice; and WHEREAS, Blitch Associates understands the City's desire to specifically continue the long - standing consulting relationship with Don Grimes, and that by entering into this agreement the City expects to continue its relationship with Mr. Grimes. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is hereby authorized to enter into a financial advisory services agreement with Blitch Associates, Inc. on behalf of the City of Seward. A copy of the contract is attached hereto and incorporated herein by reference. Section 2. This resolution shall take affect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 12` day of September, 2011. CITY OF SEWARD, ALASKA RESOLUTION 2011 -070 .r THE CITY OF SEWARD, ALASKA > � illard E. Dunham, Mayor AYES: Bardarson, Shafer, Casagranda, Dunham NOES: None ABSENT: Valdatta, Smith, Keil ABSTAIN: None ATTEST: 4 Jo anna Kin f , CMC City Clerk esti (C ity S $t1 1h1I11 •• Ci •• 4 P 0 ;i1r ., '' Y Q 0 SEAL ; • #.1g dFA o +` Council Agenda Statement Meeting Date: September 12, 2011 +d'¢ ct 4\ C : "% j y Through: Phillip Oates, City Manager From: Kristin Erchinger, Finance Director q P Agenda Item: Financial Advisory Contract BACKGROUND & JUSTIFICATION: The City of Seward has worked exclusively with Don Grimes as the financial advisor of the City for nearly three decades, since Mr. Grimes helped the City obtain financing for Spring Creek Correctional Center in the 1980s. Over the years, Mr. Grimes has brought his knowledge of the City and its financial operations to bear on many capital financing transactions including: assisting the City with devising financing plans; maximizing cost savings to the City in bond refundings; helping to represent the City at meetings involving the authorization, issuance or approval of the City's bonds; and advising the City on the best time to participate in financing transactions given market conditions. Ultimately, the job of a financial advisor is to represent the City's interests in all requested financing transactions. The City has historically paid for financial advisory services primarily when issuing bonds. The base fee for a bond issuance is typically $10,000 plus 1/8 of 1% of the par amount of the bonds ($1.25 per $1,000). When bonds are issued through the Alaska Municipal Bond Bank, the charge is 50% of this amount, and the City's bonds are almost exclusively issued through the Bond Bank. Mr. Grimes' rate to the City for a bond financing transaction has not increased in more than 15 years. In addition, a financial advisory services contract enables the City to utilize the services of the financial advisor to provide other financial advice. Although the City's financial advisory relationship has been exclusively with Mr. Grimes, the contract is between the City and Mr. Grimes' firm, Blitch Associates, Inc. In November, 2009, the City's relationship with Wells Fargo Brokerage Services, LLC was terminated when WFBS submitted their Notice of Resignation to the City, upon departure from the firm of Mr. Grimes. This is a standard practice in the industry. The administration recommends this contract as a cost - effective way to obtain quality financial advisory services from an individual with decades' worth of experience with the City of Seward's specific financial circumstances and needs. CONSISTENCY CHECKLIST Where applicable, this agenda statement is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. Other: ATTORNEY REVIEW X Yes No FISCAL NOTE The City does not budget for financial advisory services. However, at the time of a bond issue, the cost of financial advisory services will become a cost of the issuance of the bonds, and will be factored into the overall bond issue. Any specific additional financial advisory services will be charged to the finance department's existing budget. Approved by Finance: RECOMMENDATION Seward City Council approve Resolution 2011- 'approving a financial advisory services agreement with Blitch Associates, Inc.